Financial Durable Powers Of Attorney

Question: What types of financial durable powers of attorney are there?

Answer: There are two kinds of durable financial powers of attorney. One is effective immediately. The other is effective only upon the occurrence of an event named within the durable power of attorney such as someone’s disability. The financial durable power of attorney that is effective at a future time, such as disability, is also called a “springing” power of attorney.

Question: What happens if someone does not have a financial durable power of attorney and they become unable to manage their affairs?

Answer: A conservatorship proceeding is needed in probate court which is a fairly costly process. There is no guarantee a court will select someone to manage your affairs that you would have selected. A court also may not allow your conservator to do something you would have wanted, such as asset protection, or may permit your conservator to do something you would not want.

Question: What other advantages does a durable power of attorney provide?

Answer: Asset protection if someone needs to pay for long term care at home or in a nursing home.

Question: What does “durable” mean?

Answer: Durable means that if you become disabled then the power of attorney remains in full force and effect.

Question: What are the requirements for creating a durable power of attorney?

Question: What powers should a financial durable power of attorney contain?

Answer: This depends upon the wishes and particular situation and circumstances that the person making the power of attorney faces.

Question: How specific should the durable financial power of attorney be?

Answer: As specific as possible. Your agent may not do something unless the durable power of attorney specifically states that the agent may do the act in question.

Question: How is disability defined in a durable power of attorney effective at a future time?

Answer: The definition of disability is set forth in the power of attorney and is determined by the person making the power of attorney after consulting with their attorney. Typically “disability” requires a written statement by a medical doctor that the principal is unable to manage their financial affairs due to a physical or mental condition. It is not a declaration of incompetency.

Question: Are there limitations to a durable power of attorney effective at a future time?

Answer: Yes, the delay caused by the time needed to have a medical doctor sign the requested statement. Many times your named agent under the durable power of attorney needs to act quickly and waiting for a doctor to sign a statement that you are disabled may cause delays and financial loss.